DTIC policy uncertainty undermines manufacturing investment — BLSA
Business Leadership South Africa (BLSA) has warned that policy uncertainty emerging from department of trade, industry and competition (DTIC) is contributing to declining investment in the country’s manufacturing sector, as concerns mount over deindustrialisation.
In a weekly newsletter, BLSA CEO Busisiwe Mavuso said the department was increasingly being viewed by investors as a source of instability rather than support, pointing specifically to proposed amendments to BBBEE regulations as a key concern.
Her comments come amid sustained weakness in the manufacturing sector. Official data from Stats South Africa shows that manufacturing output declined 1.3% in 2025, marking a second consecutive year of contraction, with most subsectors recording declines.
Mavuso said the proposed changes to BBBEE rules could have unintended consequences for firms that have spent years developing local supplier networks. Under the draft amendments, companies risk losing their empowerment status if suppliers do not meet stricter ownership thresholds, even where those supply chains were built in line with previous policy frameworks.
Manufacturing remains a significant contributor to the economy, accounting for roughly 12% of GDP and employing more than 1.5-million people directly, according to BLSA.
However, recent trends point to a weakening base. Stat South Africa data shows the sector contracted 0.6% in the fourth quarter of 2025, making it the largest negative contributor to GDP growth during that period.
Mavuso pointed to a series of plant closures and restructuring decisions as evidence of this erosion, particularly within the automotive value chain. Over the past two years, several component manufacturers have shut operations, while Nissan has exited local manufacturing after selling its Rosslyn plant.
At the same time, investment decisions are increasingly being directed to competing markets. Nissan recently announced a $45m expansion of its manufacturing operations in Egypt, highlighting a shift in capital allocation towards jurisdictions perceived to offer greater policy certainty and competitiveness.
Broader indicators reinforce this trend. Business activity in the sector has remained under pressure, with the Absa purchasing managers’ index (PMI)consistently below the 50-point mark through much of 2025, indicating contraction.
SA vs Egypt, Vietnam and Mexico
Mavuso said companies are making investment decisions in a context shaped not only by domestic policy, but by global competition. She noted that multinational boards are increasingly weighing up South Africa against alternative destinations such as Egypt, Vietnam and Mexico when allocating capital.
She also highlighted structural constraints facing manufacturers, including high logistics costs, energy challenges and security concerns, which together affect the country’s competitiveness.
BLSA has called for a co-ordinated government response, including the withdrawal of the proposed BBBEE amendments, the establishment of a dedicated manufacturing task team reporting to the presidency, and a broader recognition that industrial policy requires alignment across multiple departments.
Mavuso warned that delays in addressing these issues could accelerate the pace of de-industrialisation, with implications for employment, supply chains and long-term economic growth.